Trustee of 2 defunct Maine employee stock ownership plans agrees to restore total of $300,000 and resign as fiduciary

BOSTON – Stephen Thomas, individually and as a trustee of the Gagne Precast Concrete Products Inc. Employee Stock Ownership Plan, has agreed to restore $225,000 to the Gagne ESOP and take other corrective action to resolve a lawsuit filed by the U.S. Department of Labor alleging violations of the Employee Retirement Income Security Act. In a concurrent voluntary settlement agreement with the department, Thomas has agreed to pay $75,000 to the Frank L. Woodworth Inc. Employee Stock Ownership Plan, for which he also was a trustee. ERISA is the federal law that protects the assets and participants of private sector employee benefit plans.

The department filed suit in February against Thomas regarding the Gagne ESOP in the U.S. District Court for the Middle District of Pennsylvania following an investigation by the Boston Regional Office of the department’s Employee Benefits Security Administration. The investigation found that Thomas violated his fiduciary duty by misappropriating and/or improperly diverting plan assets. Gagne Precast Concrete Products Inc. was located in Veazie, Maine, and Frank L. Woodworth Inc. was located in Detroit, Maine. The department filed its suit in Pennsylvania because Thomas now resides in York, Pa.

Thomas has agreed to the appointment of an independent fiduciary, Northeast Retirement Services, for both plans, and will transfer all accounts of the ESOPs to accounts established in the name of the independent fiduciary. In addition to reimbursing both plans, Thomas will be responsible for all costs associated with administering them. The funds will be collected through a payment plan, with interim payments to be held by the independent fiduciary until distribution to the ESOPs’ participants.

Thomas further has agreed to resign as a trustee to the plans; cooperate with the independent fiduciary, who will distribute each plan’s principal amount and interest to the respective participants and beneficiaries; and be enjoined from serving as a fiduciary or service provider to any ERISA-covered plan for a period of 10 years.

“Fiduciaries may act only in the interests of a plan and its participants, never for their own benefit,” said Edward Maloney, EBSA’s acting regional director in Boston. “Such behavior needlessly places workers’ hard-earned benefits at risk.”

“The Labor Department will take all necessary legal steps on behalf of plan participants when fiduciaries do not meet their legal obligations, including obtaining restitution and prohibiting an individual from serving as a plan fiduciary,” said Michael Felsen, the department’s regional solicitor in Boston.

The case was litigated by the department’s Regional Office of the Solicitor in Boston. Employers and workers can contact EBSA by calling the agency’s toll-free number, 866-444-3272, for help with any problems relating to private sector pension and health plans. Additional information about the agency can be found at www.dol.gov/ebsa.

Solis v. Stephen Thomas
Civil Action Number: 1:11-CV-00326-JEJ

U.S. Department of Labor news materials are accessible at www.dol.gov. The information above is available in large print, Braille, audio tape or disc from the COAST office upon request by calling 202-693-7828 or TTY 202-693-7755.